Do Bangkok Old Condos Enjoy Price Rise?

New condominium projects are continuously launched in Bangkok and thousands of brand new units are for sale each year. Considering Thai buyers’ distaste for old buildings, can these condos built years ago still be attractive to property buyers and thus, follow up with overall market price rise?

In fact, in the capital of the Kingdom, old condominiums do not enjoy a price increase as significant as newly built condos and some of them have not even seen their prices rise at all. It could actually be explained by the fact that prices in the city are not driven by location – as it is in most developed cities – but instead, properties in similar location will witness a huge difference between newly launched projects and old buildings.

Let’s take the example of Sukhumvit Soi 24 in the popular Phrom Phong area. On the one hand, Grand Ville House I, one of the oldest condos in the street built in 1981, see resale prices reach THB60,000 per SQM. On the other hand, Park 24, most recent project launched in Q4 2013 in the street, currently reaches as much as THB210,000 per SQM!

After 1989 and until the Asian Financial Crisis of 1997, more than 29,000 units were launched in downtown Bangkok but most of them were badly designed especially in terms of unit layouts and specifications. Many attempts to improve these condos have actually failed because of disputes between owners.

However, years following 2002 have witnessed a much better quality in condominiums and this is why, these condos could see their prices rising for the last past decade. For instance, The Park Chidlom launched in 2007 has doubled its sale price at THB200,000 per SQM as compared to its THB100,000 per SQM launching price.

Despite huge increase in prices, the condominium is still far from current launching prices property projects can achieve in such location. Indeed, high-end Nimit Langsuan was launched in Q1 2015 at a terrific THB300,000 per SQM.

Other factors are involved in the pricing of condominium and a major one is lands prices. Due to limited supply, lands prices in downtown Bangkok haven’t stopped rising for years and this is a solid factor for condos’ prices to keep increasing. According to James Pitchon, Executive Director – Head of CBRE Research in Thailand : « development sites have become more limited in the most popular condominium locations, resulting in less new supply in the areas. This may be good news for city-centre older buildings as it means less competition from new supply and high potential for price rise due to limited supply.

Also, the balance between land prices and construction costs is changing. For the first time in central Bangkok, land price as a percentage of the total development cost on a sellable square metre basis now exceeds the construction cost element. In some cases, land prices have increased from 25 percent to 60 percent of the total development costs. »

Other ways to improve the resale price of those units rely on the rental market. In fact, expatriates favor old buildings and this is why the continuous rising rents could be a great springboard to condos’ prices increase. However, in order to facilitate that, current owners will have to renovate their units and co-owners will have to agree on spending considerably sums on improving and re-designing common areas and facilities of the buildings.